NOTE
How to Invest in Stocks
English translation of the original VNote “How to Invest in Stocks”, preserving its structure with only necessary small corrections.
This is a historical learning note and may contain outdated or incomplete understanding.
Note: The original VNote structure and historical views are preserved. Product rules, returns, policies, and specific assets are time-sensitive; only clear errors or changed institutional rules are corrected minimally. This is not investment advice.
1. Keep a Stable Mindset
2. Risk
Liquidity risk is still risk. Individual investors also need to consider market depth, trading halts, extreme markets, and market-impact costs when selling large positions.
3. When to Stop Losses
The original note used a fixed “technical-analysis loss above 10% -> stop loss” threshold. A fixed percentage is not a universal rule; it should be considered together with strategy assumptions, volatility, and tolerable risk.
For a fundamentally driven position, if the fundamentals deteriorate, sell quickly. Avoid falling into loss aversion.
Do not take profits too easily.
“Leek” behavior: keep losing stocks and sell the profitable ones.
4. When to Add to a Position
If the price falls but the business has no problem, the original note suggests adding to the position. Do not fear short sellers in a good company; do not add simply because the price is rising. A limit-up move does not necessarily mean sell; sell when there is a bubble in the original framework. How to judge whether a stock has a bubble?
Dividend yield is extremely low and there is no buyback.
5. Diversification
Jinyuan Shunan Yuqi: micro-cap stocks, highly diversified. If it underperforms the benchmark, the original note says to leave quickly.
How many stocks should be held?
- Capital below 500,000 yuan: the historical note suggests concentrating in 3-5 stocks, choosing higher-expected-return growth stocks.
- Capital from 500,000 to 5 million yuan: the historical note suggests 5-10 stocks, with small-cap growth and large-cap blue chips at 60% / 40%; investors with higher risk tolerance or professional ability might still concentrate in 3-5.
- Capital above 5 million yuan: the historical note suggests around 10 stocks, with at least 40% in stable-growth/high-dividend blue chips depending on risk preference, or allocating that part directly to a CSI 300 ETF.
How Many Stocks Should Retail Investors Hold? - Zhihu
6. Valuation
Valuation How to Analyze a Company (original VNote internal link; not migrated yet)